12.09.202510:45:18UTC+00Russia Cuts Interest Rate by 100Bps

The Bank of Russia has reduced its benchmark interest rate by 100 basis points to 17% in its September 2025 decision. This marks the third consecutive rate cut, though it was less than the anticipated 200 basis points anticipated by market analysts. This recent decision brings the total reduction to 400 basis points since the benchmark rate was maintained at a historic high of 21% until June. Although monetary conditions have eased over the past year, the central bank believes they are still sufficiently stringent to address the persistent inflation, which has exceeded the 4% target for more than two years. Recent data indicates that the annual inflation rate has decreased to 8.1%, the lowest it's been in over a year. Despite this, policymakers at the Central Bank of Russia emphasized that domestic consumption has slightly increased, while pro-inflationary risks persist in the short term due to heightened inflation expectations and worsening trade conditions. Additionally, the labor market remains constrained as military mobilization and emigration among working-age men have impacted the workforce.